Loan shark: Stephen Fossey, 45, who ran an illegal money lending business from Bacup market today avoided a jail sentence after a court heard he scared no one

A market trader who ran an illegal lending racket from his fruit and veg stall has avoided jail after a court heard his interest rates were over 100 times lower than licensed payday loan firms.

Stephen Fossey, 45, used his pitch at Bacup market, Lancashire, to give credit to up to 180 customers over a four-year period.

He typically charged between 25 and 30 per cent interest on loans - compared with online credit firms who have been known to charge up to 4000 per cent on repayments.

Fossey was caught after investigators from the England Illegal Money Lending Team were tipped off by trading standards officers who were investigating a black market tobacco racket he was running.

The father-of-three set up the £140,000 loans racket as a means to save money for his retirement but he has since been expelled from the market.

Today at Burnley Crown Court, Fossey of Rossendale admitted engaging in a money lending operation, without a licence under the Consumer Credit Act, and two allegations of possessing criminal property.

But he was given a suspended prison term after a judge said customers 'spoke highly' of Fossey and he had not intimidated any of them.

Fossey's defence lawyer Mark Stuart said: 'There is no suggestion any sort of pressure was put upon people to repay.

'He was charging far less a rate of interest than those of licensed money lenders. This was going to be a pot for him, having had no pension for his retirement. He has now lost £100,000 that was owed to him.'

Fossey first agreed to lend money to customers while doing his fruit and veg rounds in Burnley, Rossendale and nearby Todmorden.

His home was searched on May 29 last year by Trading Standards officers who found a carrier bag under his bed containing two bags of money, totalling £7,164, and documentation, in particular two notebooks, an address book and a black pad.

Also seized was a handwritten letter addressed to 'Steve' and 'Phil' from one of those who had borrowed money.

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The notebooks were effectively records of loans Fossey had provided over the previous 13 months.

Over that period alone there had been 196 loan accounts between the defendant and borrowers.

Sentenced: Fossey, a father-of-three, set up the £140,000 loans racket as a means to save money for his retirement but he has since been expelled from the market

Over 100 people had an account, some had more than one and 449 loans had been issued, including top-ups. The amount of repayment received over the period was £139,579 and the outstanding balance owed to the defendant was £93,918.

Prosecutors said the operation was a 'substantial illegal business.' The majority of the accounts required repayment of £20 a week, but one person was paying back at £400 a month.

Prosecutor David Hercock said: 'The prosecution's position is that the interest charged, 25 to 30 per cent, while it could not be described as exorbitant or grossly excessive, is nevertheless high. People who borrowed were in a continued cycle of borrowing from him.

'There is no evidence of enforcing payment by violence or intimidation, but the use of the fictitious support does appear to be a mechanism or implied threat to make sure he got repaid.'

Fossey received 12 months in prison, suspended for two years, with 200 hours unpaid work. He will now face a Proceeds of Crime hearing.

Sentencing, Judge Jonathan Gibson told Fossey: 'I am quite satisfied you did not engage in any kind of threat, either implied or real to enforce loans and certainly did not use violence.

'It seemed nobody was frightened of you. No late charge was added if payment was missed and you did not take possessions or other forms of collateral.

'It seems a lot of the people to whom you loaned money speak highly of you. On the other hand, of course, this was extensive.'

After the case the Illegal Money Lending Team said some victims paid up to £200 on top of a £500 loan, and more than £1000 was added on to a loan of £3500.

One victim spoke of how he had been repaying the loan for more than 10 years and believed he had paid back thousands of pounds.

When he was struggling to repay, he was forced to take out further loans to pay off existing ones. At the point of Fossey's arrest he was paying up to £130 a week, and was told he still owed £2500.

Lee Ormandy, Lancashire County Council Trading Standards, said: 'This case sends a clear warning that illegal money lenders in Lancashire will be pursued and prosecuted.

'We will continue to work closely with the Illegal Money Lending Team, police and other agencies to protect local communities from loan sharks. Anyone being harassed or threatened by a loan shark can and should get help now.'